Understanding Different Types of Companies and Partnerships
General Partnership
In a general partnership, partners have unlimited liability. This means they are personally responsible for the debts and obligations of the business. Each partner contributes resources and shares in the profits and losses.
Key Features:
- Unlimited Liability
- Partners share profits and losses
- Joint and several liability
Company Limited (Limited Liability Company – LLC)
A company limited, also known as a Limited Liability Company (LLC), offers limited liability to its shareholders. This means their personal assets are protected from business debts. The company is a separate legal entity from its owners.
Key Features:
- Limited Liability
- Separate Legal Entity
- Flexibility in Management
Limited Partnership
A limited partnership involves two types of partners: general partners and limited partners. General partners have unlimited liability and manage the business, while limited partners have limited liability and are typically passive investors.
Key Features:
- Two types of partners: General and Limited
- Limited liability for Limited Partners
- General Partners manage the business
Public Company
A public company offers shares to the public through a stock exchange. Shareholders can buy and sell shares freely. These companies are subject to strict regulations and reporting requirements.
Key Features:
- Shares traded publicly
- Strict regulations and reporting
- Large number of shareholders
Anonymous Society (Corporation)
An anonymous society, also known as a corporation, is a legal entity separate from its owners (shareholders). It allows for the accumulation of large capital and offers limited liability to its shareholders.
Key Features:
- Limited Liability
- Shares are freely transferable
- Managed by a board of directors
Types of Corporations:
- Open Corporations: Have a large number of shareholders and are subject to greater regulatory oversight.
- Closed Corporations: Have a smaller number of shareholders and are subject to less stringent regulations.
Social Equity (Share Capital)
Social equity, or share capital, represents the funds provided by shareholders and is divided into shares. These shares represent ownership in the company and can be traded freely.
Types of Capital:
- Nominal Capital: The fixed capital outlined in the company’s statutes.
- Subscribed Capital: The capital committed by shareholders, which may not be fully paid.
- Paid-in Capital: The capital that has been fully paid by shareholders.
Shares
Shares represent ownership in a company and grant shareholders certain rights, such as voting rights and the right to receive dividends.
Transfer of Shares
The transfer of shares is typically governed by the company’s bylaws and may involve certain procedures and requirements.
Dissolution of a Company
Companies can be dissolved for various reasons, such as the will of the owner, expiration of the company’s term, or bankruptcy.